To help pull itself out of recession, Britain increased the income-tax rate to 50% for individuals making £150,000 or more. As a result, many of those affected by the tax increase shifted income into the previous tax year. In all, £16 billion of income was shifted, and the increase raised only a third of the amount anticipated (the increase raised £1 billion in all). The new budget calls for a decrease in the income-tax rate to 45% after April 2013 and the imposition of a 7% tax on purchases of homes over £2 million.
See Robert Frank, Britain’s Tax on Wealthy Caused ‘Massive Distortions,’ The Wall Street Journal, Mar. 21, 2012.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.
